Blair optimistic over fresh Middle East peace talks

Britain sees hopes for renewing stalled negotiations between Israel and the Palestinians if "sensible" members of a Hamas-led national unity government can be persuaded to meet international conditions, Tony Blair said yesterday.

Speaking before talks with the Palestinian president, Mahmoud Abbas, Mr Blair sidestepped the question of the financial boycott imposed by the US and the EU after the Islamist movement won last year's elections but made clear he did want a new coalition to take shape despite deep US and Israeli reservations.

"I think there are possibilities for progress and I hope that...a framework to take this forward becomes a bit clearer," he told MPs. "It's far easier to deal with the situation in Palestine if there is a national unity government ... I hope we can make progress, including even with the more sensible elements of Hamas."

Mr Abbas, leader of the Fatah movement, agreed in recent Saudi-brokered talks in Mecca to form a unity government with his Islamist rivals and succeeded in heading off internecine fighting. The Quartet of international negotiators, the US, EU, Russia and UN, had demanded that Hamas meet three conditions: recognise Israel, end violence and commit to existing peace agreements.

Hamas leaders have sent positive signals about de facto recognition of Israel as "a reality", but they have not met the conditions explicitly.

Israel, backed by the US, is standing firm. "Israel will not be able to maintain any kind of ... contact with a government that will not accept explicitly the principles of the Quartet," Ehud Olmert, the prime minister, told reporters in Jerusalem.